TransAct Technologies Incorporated Aktie

Greetings. Welcome to the TransAct Technology second quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Ryan Gardella, Investor Relations. Thank you, Ryan. You may begin.

Thanks, Sam. Good afternoon. Welcome to the Transact Technologies second quarter 2026 earnings call. Today we'll be discussing the results announced in our press release issued after market close. Joining us from the company is CEO John Dillon and CFO Troy Injiani. Today's call will include a discussion of the company's key operating strategies, the progress in those initiatives, and details on our second quarter. results. We'll then open the call to participants for questions. As a reminder, this conference call contains statements about future events and expectations, which are forward-looking in nature. Statements on this call may be deemed as forward-looking and actual results made from materially.

For a full list of risks inherent to the business and the company, please refer to the company's SEC filings and clinical report. forms 10-K and 10-Q. Transact under a case of no obligation to revise or update any forward-looking statements to reflect events or circumstances that occur after the call. Today's column webcast will include non-GAAP financial measures from the meaning of the SEC Regulation G. When required, reconciliation of all non-GAAP financial measures to the most directly comparable financial measures calculated in percentage and accordance with GAAP can be found in today's press release as well as on the company website. And with that, I'd like to turn the call over to John.

Thanks, Ryan, and good afternoon, everyone, and thank you for joining us today. Before I begin, let me introduce you to Troy Ingeani. I'm delighted to have him here. He's joining us as our new CFO and on the call for the first time. And let me just say, he's been great to work with. He's really exceptional at his job. And I couldn't be happier to have him on our team.

And I think as shareholders, you'll be pleased as well with him. He's a great addition, and I'm really delighted to have him here. So thank you for joining us, Troy. Thank you, John. I appreciate that. Yes. So I'm pleased to report that Transact delivered solid second quarter results that continue to demonstrate progress against the long-term strategy that we've discussed total net sales with 13.9 million and And as Troy will detail in a moment, this figure includes the impact of an approximate $1 million reduction to sales related to estimated customer refunds. These were driven by a US Supreme Court ruling on certain import tariffs. Excluding this tariff impact, net sales would have been approximately $14.9 million, up 8% year over year.

And adjusted EBITDA was 514,000 during the second quarter, also impacted by 400,000 of the tariffs of adjustments. So for the first half of 2026, we generated $1.9 million of adjusted EBITDA, resulting in us raising our full year guidance to a range of between $1.5 million and $2.2 million. So, let me begin with a more detailed breakdown of the results and I'll start with food service technology. We refer to that as FST, food service technology. So if I say that, you'll know what I mean. revenue was $5.2 million, up 9% year-over-year, and up 10% sequentially. Our focus remains squarely on driving revenue growth in our food service technology space, that's the market. software as a primary growth engine. Our second quarter results are consistent with the strategic direction we have shared with investors to date.

That's building a high margin, more predictable recurring revenue stream that leverages a growing base of online BOHA units. In the second quarter, we sold 1,900 BOHAI units, which means we now have sold 3,270 units through the first six months of 2026. and continue to be driven by upgrade orders from many of our large install base of older Accudate and Terminal One systems. Customers are seeing the value of moving to the new terminal, and we are continuing to view this conversion cycle as a multi-year runway of opportunity. We continue to execute on our land and expand strategy and believe the revised go-to-market or GTM motions and revitalized sales and marketing teams that we have are just beginning to pay dividends in the form of increased FST sales. We ended the second quarter with nearly 22,000 online units. up about 33% year over year, continuing the steady growth of our install base. That growing online base is the foundation of the software opportunity we're now actively monetizing. Most importantly, our recurring FST revenue continues to grow.

During the last quarter, the recurring FST sales reached 3.4 million in the second quarter, up 13% year over year. With that, software revenue was up 25% sequentially and 47% year over year, driven primarily by price increases that we began implementing earlier this year as part of an intensified focus where we ensure that we capture fair market value for the software offerings we have. And as I've said before, In the past, the company frequently bundled the software for free simply to close a hardware sale or to get the label business. This practice now is behind us. control the source code for the software and the platform. We're deliberately seeking to shift the business model towards a higher margin, sustainable and predictable recurring software revenue model. So this should make pretty good sense, but later I'm happy to discuss this in detail for any of those who want to follow up. Our long-term aim remains to drive the FST install base toward $100 to $200 per machine per month in recurring software-related revenue.

That level of monetization applied to the growing base of terminals has the potential to unlock significant value for transactions. Labels also saw a strong quarter, contributing positively to our gross margin and enhancing retention within our customer base. We'll continue to lean into the label sales business as a key piece of our long-term FST strategy, as growth within the terminal base generally helps grow both the label the software businesses and the label business creates a stickier long-standing relationship with the client and creates a greater degree of intimacy there so it's very important On the technology side, as you've heard, we recently launched our next generation enterprise grade BOHA SaaS, that's Software as a Service platform, with the completion of our migration from our legacy hosted infrastructure to Microsoft Azure. This was a strategic move. It significantly enhances the platform scalability, security, resiliency, and performance. allowing us to bring innovation and requested enhancements to market faster, deliver seamless integrations with other systems such as point-of-sale systems, and provide enterprise-grade uptime disaster recovery across large multi-location deployments. Combined with the control of the software, the new platform also gives us greater operational freedom and positions us to accelerate our software roadmap. including implementing AI-related workflows and additional applications over time. Internally, because people asked, AI is also helping us with the development teams. They can move faster and quicker, and it's more a function of having experts looking at code that's written by AI rather than having a typing pool that types things and we have to fix it anyway.

Remain focused on the practical application for AI, but we feel confident that it will leverage our integrated hardware and software solutions approach in the future. Turning to casino and gaming, revenue in the second quarter was $7.3 million, down approximately 4% from the prior year after adjusting for the tariff-related impact of the refunds for the casino and gaming revenue would have been approximately $8.3 million, approximately up 9% year over year. We saw solid contributions from key OEM customers, both domestically and internationally. And a relatively new Epic TR-80 roll-fed printer continued to gain traction internationally in the gaming applications for... for betting kiosks and similar systems like that. And finally, moving on to our financial outlook, we reaffirm our full year 2026 net sales outlook of 57 to 55 million. And as noted earlier, we are increasing our adjusted EBITDA outlook to around range of $1.5 million to $2.0 million. So we delivered solid second quarter results, continued to demonstrate real progress against our strategic priorities, sold 1,900 online BOHA units, increased our recurring revenue opportunity.

We posted software revenue growth of 47%, and we successfully launched the next generation BOHA platform on Azure. The recurring revenue continues to build, our installed base is expanding, and we remain firmly on track to deliver against our financial and strategic goals for the year. At the center of the strategy is to build out a high-margin software-led recurring revenue business on a growing install base. We are executing that transition with disciplined capital allocation and, frankly, the strength provided by a solid balance sheet. So those are most of my remarks, but before I turn it over to Troy, I wanted to provide some additional news related to casino and gaming. The Board of Directors recently initiated a formal strategic review related to the casino and gaming business. Management has engaged B of A Securities as its financial advisor, given their expertise within the casino and gaming market and their long-term standing relationship with Transact.

We believe that exploring potential options within casino and gaming, given the current strength of that market, is in the best interest of stockholders as they look to maximize value. While the review is focused on the casino and gaming business, the board intends to evaluate a broader range of strategic alternatives to the extent the board determines that doing so is not a good idea. so may further enhance stockholder value. As you would expect, the company has not set a public timetable for the review and there can be no assurance that the review will result in any transaction or other strategic outcome. We do not intend to disclose developments until our Board of Directors has approved a specific transaction or course of action. or until which time we otherwise determine that disclosure is appropriate or required. We have the right platform, we have the right focus, we have the right team to continue driving the software transition forward. also focusing on strategic potential options for casino and gaming. So those are my remarks, and with that, I'll turn the call over to Troy for a more detailed review of the financial results. Troy?.

All right, thank you, John. I appreciate the kind words, and thank you, everyone, for joining us today. So, today is my first earnings call at Transact. I just wanted to take a minute to introduce myself. I bring to the company more than 25 years of financial leadership experience. Most recently, I served as the VP Global Controller and Chief Accounting Officer at Barnes Group, which was a global public company that got taken over by a I joined Transact on July 1st because I believe in the BOHA platform. I met with John. You know, I could see that it represents a really compelling growth opportunity for the company. So I'm excited to partner with John, the team, the executive team that I've met here, and And I think we're going to really be able to strengthen the financial foundation and support the company's continued success.

So as you can tell, I'm very happy to be here. With that, let's turn to the second quarter results in a bit more detail. Total net sales for the second quarter were about $13.9 million, which were up slightly compared to $13.8 million in the prior year period. John mentioned this earlier. There was an impact on the financials related to tariff refunds that I'd like to spend a minute to discuss. Our second quarter results reflect the impact of a February 20th, 2026 US Supreme Court ruling that declared certain import tariffs to be invalid. During the periods in which the tariffs were in effect, we collected both the actual duties and related service and management fees from our customers. These amounts were broken out as tariff surcharges on the invoices themselves that we had with the customers.

As of now, we're in the process of reclaiming the duty amounts from the government. There's a portal that was set up, and we plan to return these amounts in full to the customers who requested and paid them, as these were pass-through collections from a tariff standpoint. On the service and management fees, we have decided to refund a portion of the previously recognized tariff surcharge and return those amounts to the customers while retaining a modest management fee to cover the direct costs that we incurred while administrating this process for our customers. As a result, in the second quarter, we recorded an approximate 600,000 reduction to cost of goods sold related to the tariff refunds from the government, along with a corresponding 1 million in estimated customer refunds, thereby reducing sales. Subsequent to quarter ends and through the date of this call, we have received about $500,000 of the expected government refunds. This represents about 80% of the total. So we're still expecting some portion of refunds to go, but we are starting that process of returning the funds to our customers.

Excluding this tariff impact, total net sales would have been $14.9 million, up approximately $1.2 million, or 8%, compared to prior year period. Sales from our FST business for the second quarter were 5.2 million, up 9% versus 4.8 million in the prior year period, and up 10% sequentially from the 4.7 million in the first quarter of 2026. John mentioned this earlier, but we did sell 1,900 BOHA units in the second quarter of 2020. quarter, which was impressive. Our recurring FST sales, which include software and service subscriptions, as well as consumable labels, were 3.4 million in the second quarter. This was up 13% as we had 3 million in the prior year period. And John also mentioned software revenue was up 47% year over year, driven primarily by price increases. ARPU for the second quarter of 2026 was $673, down 15% to $792 in the second quarter of 2025, and down 5% sequentially from $709 in the first quarter of 2026.

Now, recall that ARPU ARPU includes software, labels, and other sources of recurring revenue. So we are very pleased with our label sales. However, we also recognize that as our software and our installed base grows, this metric, ARPU, it becomes less indicative of true software growth. Going forward, we plan to share metrics that better reflect our contractual software side of the house. John, myself, and the leadership team are working through some key metrics now, and we plan to, as I said, share those with you in the future. Our casino and gaming sales were 7.3 million, which were down 4% compared to 7.6 million in the second quarter of 25 and down 13% sequentially from 8.3 million in the first quarter of 2026. As with our company wide results, casino and gaming sales this quarter were were impacted by the tariff-related revenue reduction that I mentioned earlier of $1 million.

Excluding this impact, however, and gaming sales would have approximated 8.3 million, which would have been up 700,000 compared to prior year period. And then as it relates to our Epic TR80, that line continues to build momentum internationally in role-fed gaming applications. Turning to POS. POS automation sales of our Ithaca 9000 printer for the second quarter were 619,000, up 5%, compared to 590,000 in the prior year period. sales remain in our normalized range of about 600,000 per quarter and we expect these results to remain similar going forward. It's a steady business, I'd say, at this point. Moving to Transact Services Group, or TSG, sales. For the second quarter, TSG sales were 838,000, up 3% from 818,000 in the prior year. The increase was driven by higher service revenue related to legacy-based lottery printers, partially offset by lower spares and accessory revenue, as their legacy install base continues to just naturally wind down.

Moving down the income statement, our second quarter gross margin was 50.2 percent compared to 48.2 percent in the prior year period. This was roughly flat sequentially from 50.3% in the first quarter of 2026. We do continue to expect our gross margin to be in the mid to high 40% range for the full year 2026. Our total operating expenses for the second quarter were $7.1 million. This is up 2% compared to the $6.9 million in the prior year period. If I were to break down these operating expenses a bit more, our engineering and R&D expenses for the second quarter were $1.2 million, which is down compared to 1.7 million in the prior year period. This reflects the capitalization of software consulting and R&D costs related to the in-housing of the BOHA software, which John had mentioned earlier, we now have control over that source code.

And we've now begun amortizing these costs that were capitalized in the third quarter of 2026. Our selling and marketing expenses for the second quarter were $2.7 million, up 30% compared to $2.1 million in the prior year period. The increase reflects new hires that we initiated in 2026, along with higher trade show, advertising, and also some commission expense. Lastly, our G&A expenses for the quarter were 3.1 million. This was essentially flat compared to prior year period. We had higher legal expenses related to the executive transition and other strategic items, but these were largely offset by lower bonus expense, so overall we ended up flat. On the bottom line, we recorded a net loss of $50,000.

These were break-even results from a diluted share standpoint during the second quarter of 2026. And it's compared to a net loss of $143,000, or a one-cent loss per diluted share in the prior year period. We recorded income tax expense of $30,000 as we continue to take a full valuation allowance against our U.S. pre-tax earnings. Adjusted EBITDA for the quarter was $514,000, compared to $478,000 in the second quarter of 2025 and $1.4 million in the first quarter of 2026. For the first half of 2026, our adjusted EBITDA was right around $1.9 million. This is what allowed us to raise our full-year adjusted EBITDA to a range of 1.5 to 2.0. Our balance sheet remains strong. We have $19.4 million in cash and cash equivalents.

And as in past periods, we held only the minimum balance on our revolver with Ciena, giving us the maximum financial flexibility going forward. We'll continue to closely manage the balance to ensure that we provide optionality as well as ensuring value is delivered to the shareholders to the extent we have the cash. Lastly, I'd comment that we have not repurchased any shares during the quarter and And again, thank you all. Appreciate you being on the call. Appreciate your continued interest in Transact and all that we're doing. and appreciate the support. Happy to be here. I'm excited to work with the team. With that, I'd like to turn the call over back to the operator.

Operator?.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star 2. keys. One moment please while we poll for questions. Our first question is from Greg Burns with Sidoti and Co.

Please proceed with your question.

Good afternoon. Maybe you could just help us understand behind the strategic review. I know you had started with the order process in the past and discontinued it. What's changed? Why now? And, um, It's possible that you might be able to share with us the EBITDA of the casino business, so we might...

better assess what the value of that business might be? Thanks. Well, on the last part of your question, my goal is eventually to share the specific even doubt between the two go-to-market strategies that we have. When we ran the process before, it was in a really turbulent time for the company. We'd come out of the pandemic. We had supply chain. where there was a shortage of supplies, we captured 100% of the market as gaming casino OEMs, guys that make the slots overbought. We had to work that down, so we had a real whipsaw and all that. And candidly, the gaming business hadn't stabilized and recovered, and it has now.

The other thing is, by contrast, the two businesses – our role in the gaming industry is relatively small and a fairly large industry. The opportunity in the FST space is, you know, as a TAM, a total addressable market, depending on who you listen to, currently at least a $4 billion and maybe closer to $12 billion, expected to go to about $32 billion. I'm sorry, going to about $18 billion in 2032, 2033. So it's... we look at cash allocation as most of you know the gaming business has been profitable cash cow as it were in traditional sense and we need to figure out collectively you know kind of what's the best strategy with that unit where our strategy is pretty well baked with FST we kind of know what to do we have to execute, but with the gaming casino business, you know, do we expand? Do we do this? Do we do that? And so now's a good time to do that. And. As we commented on the call, we selected Bank of America Securities. I've known the team there for probably at least a few years. They know the industry well, and we thought they would be a really outstanding partner to help us figure out the best scenarios for how to monetize that asset.

Okay. When you think about monetizing that asset,.

The FST business is obviously this kind of emerging growth company. it's got the cash, I guess, cash backing of the gaming business. But if you sell off the gaming, where does that leave the FST business? Does it have enough capital to grow? Do you think you could get that business... to break even from a cash flow perspective with the cash you have on hand?.

I think the answer to that question is yes.

When we look at growing the software component of the FST business, Are you now bundling software, a software package with the new BOHA sales?.

Well, that's correct. Now, as you know, we've got about 22,000 online systems, and many of those systems were sold back in the day when we really didn't appreciate the value of the recurring software business. And obviously, we've got that religion now. So part of what we're doing is we're going back to the old way. to existing clients and we have a really good book of business and we're saying, Hey, you know, we put this stuff up on Azure, it's a better scenario. Um, We're now paying for the hosting, delivering better support, reliability, etc. And this service, because these systems are all online and our clients can look at data, they can do reports, they can change menus, they can do things. I mean, we're delivering – it's just like delivering an app. and there's a fee for that. And so we're negotiating and discussing with clients what that fee ought to be, and we're working on that.

In addition to that, when we sell new systems, either to existing customers, additional systems to existing customers, or if we sell new systems to new customers, we expect to bundle software packages. Now, we have a really broad offering. It's got a number of components, and some clients need some of it. Some clients need all of it. Some of them even need all of it, but they also want to integrate with other in-house systems. We have the wherewithal to do that. It's typical in our space for units like this that might go into a QSR, a quick service restaurant, or a flight. dining establishment or maybe in a facilities managed dining facility where the units generate $100, $200, $300 a month in recurring revenue.

And candidly, we missed that opportunity in the early days because we were focused as a hardware company mostly on moving the units. And so I guess the answer to your question is yes. we're focused on adding software components, offering bundles, and making sure that the software that we deliver, we capture fair market value for that. Again, that's been a transition period for us, very much like some of the other companies. Like remember when Microsoft was selling disks and you paid for it once, and now you have Microsoft 365. sort of like that transition. We're going through it now, and we've got some pretty good results, and we're pretty optimistic about how it's going to work out.

Okay, so maybe you could help us understand the economics a little better. Like, what would be, like, the average bundle on a new BOHA system? And you sold 1,900 new systems this quarter. Did those all have a bundled software package, or is that more something in perspective quarters where you start to –.

you know, attach software packages? Yes. Well, in some cases, the customers already had software. And in some cases, if they're retiring an old machine, and some of those machines were online, but they were first or second generation, those licenses would go with. In some cases, they'd have... one license or two licenses for one or two of the modules and we'd add the temperature taking application or the reefer monitoring things for temperature outages or we might add checklists or one of the other applications and we sit down with the client and say, what do you need? Are you expanding? What's your vision? We work with them on that. So to answer your question, something very, very basic might be you know, 75 to $90 a month for basic, uh, uh, nutrition, food labeling, and date coding, and something simple like that. But it's also the case where some of the clients will buy all of the different applications. And candidly, we're a solutions vendor and we go in and we work with the clients over what are their challenges.

And every food service industry has different challenges. But some of the machines we sell, we sell to customers that already have licenses. Some of them we sell and we bundle a license with it. Some of them we take a license and then we ask them if they want more than just the basic stuff. And that's kind of it. And so, no, I'm not giving you a precise answer, but the reality is our sales team figures it out case by case, and it's working pretty well. As you know, we target the largest customers in the industry. There's two ways to do it. to go out of market, you can start at the top where all the money is, or you can start at the bottom and hope you work your way up. because we got our start by helping design systems for McDonald's, we learn an awful lot about what a sophisticated client would want.

So our products are best suited for large organizations that may have two or three hundred locations or a thousand locations. And so we get into conversations with those clients about what their future vision is. Many of the industry are going through digital transformation, something that many other industries went through a decade or more ago. The food service industry is under a tremendous amount of economic pressure today because of wage rate inflation, labor turnover, and safety, and things like food waste food quality. So, you know, we sit down with them, we talk to them, and we find the right package, and that's what we sell. So sometimes there's not too much, maybe some basic stuff, and they pay, you know, 50 bucks a month for a unit, or sometimes they might pay three, four hundred dollars a month per unit. And I can't give you a specific because for two reasons.

One, we got a lot of moving parts right now and we're just getting our sea legs relative to understanding all of the metrics then as Troy pointed out we're going to start giving you more and more of those metrics but let's just say with the results that we've got so far we're feeling really good about the uptake. And I think that's probably a really great harbinger of future times to come.

Okay. I might have missed it, but in past quarters you've disclosed new customer logos. I don't know if that's not some, if you did disclose it, I might have missed it, or if that's not something you're going to be sharing on a go-forward basis.

Well, we do share logos. One of the problems that we have with that metric, and I'll be the first to admit it, one of the things that you all know is once you start sharing a metric, everybody wants to know what it is every time because you try to compare. What we found with that is that we have organizations that deliver solutions in the food service industry. So, for example, if you take FSM, which is a food management company, they do food management for, you know, maybe three or one division might do food management for three or 400 institutions. And when we win one of those, when we win one of the food service management contracts with our food service management, customer they will place the units in dozens and dozens of different into different venues. So for example, I'm up here in Oregon on this call and I was doing some shopping at Fred Meyer. And Fred Meyer happens to be owned by Kroger. And it turns out that we do grab-and-go sushi for about 47 Kroger – for 47 Kroger grocery stores.

And so the question that we've got is, would it be better to talk about the, the breadth and the sort of the domination of this product as it moves through the market. Or if we say we won one customer, it's a food service management company. And it's one of these huge billion dollar companies. So what I think we're going to do is we're going to start reporting unique products, food service venues. In other words, a new venue that we weren't in before, regardless of how we got in, because I think that speaks more to market share. But we kind of found out that in this last quarter, we were so very focused on developing the software business, we spent less time selling into net new customers, And at the same time, we basically overhauled our sales and marketing team so that the lead gen system is starting to really work well. And so that's lagged a little bit.

And so we debated about whether we should talk about another number of new venues. We decided not to do either. So frankly, you're not going to get a report on this particular earnings call. But I do expect to talk about net new customers and do expect to talk more importantly about new FST venues that we captured that we wouldn't have captured if it wasn't for some kind of partner or OEM that's going into those markets.

Okay, thank you. Once again, if you would like to ask a question, please press star 1 on your telephone keypad. We have reached the end of the question and answer session. I would like to turn the floor back over to John Dillon for closing comments.

I'd like to thank everyone again for joining us. I appreciate your time and attention. And obviously these calls don't cover everything, and I look forward to talking to all of you and many of you during the coming months, during the remaining of the quarter, and look forward to talking to you again on the quarterly call at the end of the third quarter. Thank you very much.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

This live transcript is auto-generated without human intervention or review.

[Call has ended.]

Greetings, and welcome to the TransAct Technologies First Quarter 2026 Conference Call. [Operator Instructions] Please note, this conference is being recorded.

I will now turn the conference over to Ryan Gardella, Investor Relations. Thank you. You may begin.

Thanks, Jesse. Good afternoon. Welcome to the TransAct Technologies First Quarter 2026 Earnings Call. Today, we'll be discussing the results announced in the press release issued after market close. Joining us from the company is CEO, John Dillon; and President and CFO, Steve DeMartino.

Today's call will include discussion of the company's key operating strategies, the progress on these initiatives and details on our first quarter financial results. We'll then open the line to participants for questions.

As a reminder, this conference call contains statements about future events and expectations, which are forward-looking in nature. Statements on this call may be deemed forward-looking, and actual results may differ materially. For a full list of risks inherent to the business of the company, please refer to the company's SEC filings, including its reports on Forms 10-K and 10-Q. TransAct undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances that occur after the call.

Today's call and webcast will include non-GAAP financial measures within the meaning of SEC Regulation G. When required, a reconciliation of all non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP can be found in today's press release as well as on the company website.

And with that, I will turn the call over to John.

Thanks, Ryan, and good afternoon, everyone. Thanks for joining us. It's a nice afternoon here, and I'm pleased to report today that TransAct delivered a solid first quarter, '26. Total net sales of $14.4 million, up 10% year-over-year, generating an adjusted EBITDA of $1.4 million, which is a strong start for the year. As we discussed, our focus remains on driving revenue growth in our foodservice technology or FST vertical with software as our primary growth engine going forward, supported by targeted and disciplined investments across the business to accelerate sales.

In the first quarter, we sold 1,370 BOHA! Terminal, driven mostly by upgrade orders from our 40,000-plus unit installed base from prior sales of older products. We also continue to see strong interest from existing customer base to move from either the AccuDate, which is an older system or the T1, which is also an older system to our newer Terminal 2, T2. We see a long runway of growth there. So that's a good sign. We ended the first quarter with 19,959 online terminals, which is an increase of a little over 1,000, actually specifically 1,062 new online terminals over the fourth quarter of 2025.

Most importantly, our recurring FST revenue continues to grow. Our software revenue were up 23% year-over-year, which gives us confidence in our strategic direction. And we're very focused on generating this revenue, which is high margin, certainly higher margin than hardware. It's more sustainable and predictable. And it's a focus we didn't really have in the past because we didn't own the software and we own it now. So we can start selling the software in a way we couldn't do before.

So with nearly 20,000 online terminals now in the field, this is the time to begin monetizing these deployments more effectively. In the past, we didn't really do this. And in fact, software was often bundled for free to make a hardware sale. Now our focus is to ensure that our customers are paying for and receiving a fair market value of our leading software offering. And given the importance of this growing revenue stream, we will begin sharing more and more of our ANR details, recurring revenue details each quarter to help you track that progress.

ARR includes, for your reference, software, but also includes contracted support service, which is a high-margin service for us because our products are highly reliable and the labels. So from an information standpoint, for first quarter, ARR revenue was $3.3 million, and we firmly believe that the future for TransAct will come from recurring software revenue rather than onetime hardware sales.

Longer term, we're aiming to get our installed base up to $100 to $200 per machine per month in recurring software revenue, which could really unlock a lot of significant value given the size of our installed base and the fact that it's growing.

Next, let me say a few words about the update on our port of our software to the new platform. As you know, we acquired the software about a year ago last April. And we're making good progress here. We've pulled the -- pulled forward our go-live date from what was originally suggested to be first quarter of 2027. And now it looks to be late Q2 this quarter, late in this quarter or early Q3 of '26. So that's really good news and good progress. And I'd like to say that our cloud partner, our public cloud partner in this has done a really terrific job helping us with this transition.

And as I stated before, ownership of the source code and launching our own hosting platform is really crucial for our recurring revenue model going forward. It provides us with an increased level of operational freedom and enables us to accelerate software innovations like exploring, for example, an application store model for our own terminals where we could add additional applications, which either are grown in-house or maybe sourced from outside through partners. So this model is appealing. And as we get into full production here, I think that's an interesting growth engine that we probably can explore successfully.

I also want to speak briefly about AI, also known as artificial intelligence. And I know it's a hot topic in any software investment thesis right now. So I'd like to say a few words about it. Most of you probably know that AI was developed in the '50s. We're talking a long time ago, almost 75 years ago. And now it's really coming into its own because we have more data. We have cloud compute capacity, which bursts that allows you to put a lot of machines to work all at once. And we have compute power in the form of GPUs and other optimization that's happening, so the compute power is greater.

So work that couldn't used to be done in a meaningful fashion or certainly couldn't eclipse human capability now is doing some stunning things, which are really important. And I believe AI will serve and continue to serve as an accelerant in our case for our business. It allows our developers to focus more time crafting existing new applications for our platform and reduces many of the mundane tasks that previously consumed an enormous amount of time from our good engineers.

As well, our integrated solutions approach insulates TransAct for most of the potential downsides from AI that might affect valuations for companies with simple applications and really a somewhat, again, simplistic pure SaaS model. That's not TransAct.

If you keep in mind that we offer SaaS applications, of course, that are Software as a Service, but these are integrated applications or rather solutions running on a purpose-built platform with hardware, software communications like Bluetooth, LTE, WiFi, APIs, application program interfaces that talk to other systems, IoT, which includes sensors like the Temp and Sense in the kitchens, things like that. And of course, a mainstay for us are our printing capabilities in different types of food service environment.

So all in all, having an integrated solution is something that isn't easily disintermediated, and we see AI as a plus for us given that right on the threshold of a lot of advance and a lot of progress as we roll out software into the marketplace that we're already in. So for us, AI is a great accelerator, and we think it's going to serve us well. And I just thought it was worth saying a few words about that. And separately, in other calls, I'd be happy to talk a little bit more about AI.

In terms of our GTM, the go-to-market, we're pleased with our strategy. It includes an emphasis on competing -- on competitive pricing, strategic partnerships, targeted outreach and high potential submarket verticals such as QSR, that's quick service restaurants, convenience stores, grab-and-go sushi, which has done really well for us and corporate food service management from food service management companies. And at the same time, we expect to maintain a disciplined cost management regimen, target positive adjusted EBITDA and preserve the strength of our balance sheet, things I'm sure you guys care about.

Turning to our FST highlights specifically for the first quarter. Total FST net sales came in at $4.7 million, driven by strong recurring revenue growth and more offset by lower hardware sales. Recurring FST revenue reached $3.3 million. ARPU, the average revenue per unit, $709 per unit. Labels were $2.6 million in the quarter, up 26% from the prior year driven by stronger volumes from long-standing customers, including Love's Travel Stops, Hissho Sushi and our 2025 win at Yummi Sushi.

These customers spend a lot of money with us. We have designed software. We help them with their labeling systems. And frankly, it's one of the things that creates a greater degree of customer intimacy. And frankly, it also makes the customer relationship with us stickier. It means that attrition rates are low, retention is high, and that's a good thing.

Labels remain a margin-accretive component of our P&L, and they help build the stickiness that I already mentioned. And as a solutions vendor, our labeling expertise and related services add a lot of differentiated value for our clients. Near term, our labels business also holds potential for labels-only deals where we might win customers based on the value, the quality, expertise and pricing advantage that we can offer, and that's another door into customers. It's a distinctive competence that we can use to ultimately get in and sell additional products to clients that might start with us for just labeling and then move into some of the other applications our BOHA! suite offers.

So in the first quarter, we landed 22 new logo accounts from direct sales and from our market partners and with the potential of about 1,405, about 1,400 potential future units. We tend to use a land and expand strategy because our product performs well in situ, and it's great for us to get a small order from a potentially large client and then we treat that as an account management opportunity to get follow-on business and expansion revenue. We also remain confident in our new pipeline logo -- logo pipeline for the remainder of 2026. So we feel like we're in pretty good shape.

And I also wanted to mention that when our customers win, we also win. We had a number of key customers this last quarter adding new stores to their portfolio in the quarter, and that presents an opportunity for us to sell into these new locations. So when we get revenue growth from these expansions, it comes without a huge sales investment like it takes when we want to win a net new account. So expansion business is always easier to win, and it's a really important aspect of our land-and-expand model. And as our customers expand, we can expand with them.

I also wanted to provide a brief update. You know from prior press releases and maybe conversations that we hired a new Chief Marketing Officer or CMO last quarter. Her name is Dana Loof. She joined us, I think, in early January, and I'm incredibly happy with the structure and progress she's brought to our marketing function since joining us.

I've had conversations with many of you about how our brand is somewhat -- I guess, I would say, lackluster or kind of languishes out there. Our website hasn't been particularly hard hitting with calls to action and really compelling reasons why you should buy our technology and why you should buy it now. She's changing all that, and I'm delighted. The progress from her so far has been excellent. The focus has been competitive positioning, messaging and building out our lead gen engine. And we've already seen improvements in our press cadence and digital presence.

She's also been hard at work to update our website, which some of you have commented on to me personally as well. In any event, we're delighted with the improvement she's already made and even more excited about the momentum she's building, and we think she can generate a lot of opportunity for us. Stay tuned. I think you'll see TransAct delivering a much improved market presence and brand presence as we go forward into the future. So I think of that as actually really good news, a key individual, key executive really making a difference.

Shifting over to casino and gaming. We recorded net sales of $8.3 million for the quarter, up 24% from $6.7 million in the prior year period. Both domestic and international demand was strong with results in each segment up over 20%. And our Epic TR80, which is a relatively new product, is also gaining some meaningful traction internationally in what we call roll-fed gaming applications. These would be things for like kiosk betting and things like that, where it's a roll printer that prints out the tickets from these machines.

And although our casino and gaming business is highly cyclical, we have found there's always a significant free cash flow component generated from it, and we don't expect that to change much in 2026. I do point out that it's lumpy somewhat, but it always bounced back and it's consistent. And I've got some recent casino statistics and slot machine statistics. And the CAGR there is respectable. It continues to grow and more casinos are opening.

And at this point, as you know, it's a relatively high-margin business, and we have -- we're in a duopoly market. And we continue to service a significant portion of that overall market. And today, we believe that our ship share now approaches parity with the other large vendors serving the same market. So that's really important. We've made great progress. We've got a great sales team there. They know the industry cold and we're very well equipped to continue to maintain our presence in this space going forward.

Turning to our financial outlook for '26. I'm reaffirming our '26 net sales outlook. And we basically suggested $55 million to $57 million for the top line. And as you'd expect, I'm raising our adjusted EBITDA outlook to between a range of $1 million to $1.75 million based on first quarter guidance and performance.

We're off to a good start, $14.4 million in net sales, $1.4 million of adjusted EBITDA. 1,370 BOHA! Terminals grew our online terminal base to nearly 20,000, which is a good opportunity for us going forward.

Software revenue rose 23%, posting our confidence in that part of the market. It's high-margin recurring revenue model, which you'd expect us to try to drive. And we're making progress on monetizing the installed base and look forward to giving you more updates on the ARR progress each quarter, and I'm hoping to be able to add more specific metrics so that you can dive in and get a better understanding of the business. Feel good about the strategy, direction and where we fit in the marketplace, the evolution of our business in the coming year.

So that's kind of where we're at. And before handing the call over to Steve, I know you've probably seen that we made a -- we did a report last week with this transition for our Chief Financial Officer. I just wanted to thank Steve for 30 years of tireless, tireless. I promise it was tireless effort and support at TransAct. He's been a stalwart. He's been here from the original IPO way back in '96, which is just an incredible feat of dedication, support, loyalty and a job well done.

Steve, you're an asset to the team. You got to be missed, but your retirement is certainly well earned and deserved. So we wish you all the best. And I know you're going to be around. You're going to be helping us at least through the end of the year in various forms and fashion and support. But congratulations on this well-earned retirement.

And with that, maybe this is your last call. I'd like to turn the call over to Steve DeMartino.

Thanks for the kind words, John, and thanks, everyone, for joining us today. Let's turn to our first quarter '26 results in a little more detail. Total net sales for the first quarter were $14.4 million, and that was up 10% compared to $13.1 million in the prior year period.

Sales from our FST market for the first quarter were $4.7 million. That was down 4% compared to $4.9 million in the first quarter of '25 and nearly flat, declining just 2% sequentially from $4.8 million in the fourth quarter of '25. And as John said, we sold 1,370 terminals during the first quarter of '26.

Our recurring FST sales, which includes software and service subscriptions as well as consumable label sales for the first quarter were $3.3 million. That was up 26% compared to $2.7 million in the prior year period.

Our ARPU for the first quarter of '26 was $709. That was down 7% compared to $761 in the first quarter of '25 and down 6% sequentially from $756 in the fourth quarter '25. Our ARPU reflects our continued focus on the growing recurring revenue base. And we are making progress transitioning our large hardware-only customer towards a recurring model, and we expect this effort to begin to contribute positively to ARPU in the coming quarters.

Our casino and gaming sales were $8.3 million. That was up 24% from $6.7 million in the first quarter of '25 and up 55% sequentially from $5.4 million in the fourth quarter of '25. Domestic sales were up 20% year-over-year on strength from several large domestic OEMs, while international printer sales grew at 35% with solid contributions from both Europe and our Asia, Australia regions.

The Epic TR80 is also beginning to build momentum internationally in roll-fed gaming applications. While we expect fluctuations quarter-to-quarter in our sales, overall, we expect casino and gaming sales to continue to contribute positively to our cash flow throughout '26.

POS automation sales of our Ithaca 9000 printer for the first quarter '26 were $620,000, essentially flat compared to $618,000 in the prior year period. Overall, Ithaca 9000 sales remain in a normalized range, and we expect results to remain similar going forward.

Moving to TransAct Services Group or TSG sales. For the first quarter, TSG sales were $764,000. That was down 5% from $808,000 in the prior year period. The decline was driven by lower spares and accessories revenue as our legacy installed base continues to naturally wind down. Legacy consumables, which consists solely of our remaining thermal POS paper roll inventory at this point are nearly fully sold off. So we expect little to no revenue from these products going forward. Overall, we expect TSG sales to continue to slowly decline over time.

Moving down the income statement. Our first quarter gross margin rose to 50.3%. That compares to 48.7% in the prior year period and up sequentially from 47.6% in the fourth quarter of '25, and that was largely on the strength of casino and gaming sales in the first quarter, strong casino gaming sales in the first quarter. We continue to expect our gross margin to be in the high 40% range for the full year '26.

Our total operating expenses for the first quarter were $6.5 million, and that was up 2% compared to $6.4 million in the prior year period. The modest increase was driven by higher selling and marketing expenses and G&A expenses, partially offset by a meaningful reduction in engineering expenses as we began to capitalize R&D costs related to the BOHA! software in-housing effort.

Breaking down our OpEx a little bit, our engineering and R&D expenses for the first quarter were $1.4 million, and that was down 16% compared to $1.6 million in the prior year period. Our selling and marketing expenses for the first quarter were $2.2 million. That was up 5% compared to $2.1 million in the prior year period. The increase reflects new hires initiated during the first quarter as well as higher travel expenses and sales commissions tied to our stronger sales results.

Lastly, our G&A expenses for the first quarter were $2.9 million. That was up 10% compared to $2.7 million in the prior year period. The increase was largely driven by higher share-based compensation and recruiting fees for new hires made during the first quarter.

For the first quarter '26, our operating income was $800,000 or 5.3% of net sales, and this compares to near breakeven operating loss of $15,000 or 0.1% of net sales in the prior year period. On the bottom line, we recorded net income of $800,000 or $0.07 per diluted share for the first quarter of '26, and this compares to net income of $19,000 or breakeven results per diluted share in the year ago period.

We recorded income tax expense of $23,000 and an effective tax rate of 2.9% as we continue to take a full valuation allowance on our U.S. and Macau pretax earnings and record tax only on income from our U.K. subsidiary.

Our adjusted EBITDA for the quarter was a positive $1.4 million, and this compares to negative $499,000 in the fourth quarter '25 and $544,000 in the first quarter '25. This was a strong start to the year and keeps us well on track to deliver positive adjusted EBITDA for the full year '26.

Lastly, turning to our balance sheet. It remains solid. We ended the first quarter with $18.8 million in cash, and that compares to $20.4 million at year-end '25. And in terms of debt, we had $3 million of outstanding borrowings under our credit facility with Siena Lending.

Finally, thank you all for your interest and trust over the years. As my 30-year career at TransAct comes to a close, I want to extend my heartfelt thanks to our shareholders for your steadfast support of both TransAct and me. I look forward to staying in touch.

And with that, I'd like to turn the call over to the operator for questions. Operator?

[Operator Instructions] It appears we have no questions at this time. So I would like to turn the floor back over to John Dillon for closing comments. Mr. Dillon, you may proceed with your closing remarks.

Thank you very much for joining us today. There's no questions, I'd be happy to chat with any of you offline, downstream. You can reach us through Ryan Gardella from ICR. And again, thank you and best regards. And with that, Steve and I will sign off.

Thank you. Ladies and gentlemen, we thank you for your participation. This does conclude today's teleconference. You may disconnect your lines at this time, and have a wonderful day.

Greetings, and welcome to the TransAct Technologies Fourth Quarter 2025 Earnings Call. [Operator Instructions]. As a reminder, this conference is being recorded. It is now my pleasure to introduce Ryan Gardella, Investor Relations. Please go ahead.

Thanks, Paul. Good afternoon. Welcome to the TransAct Technologies Fourth Quarter and Full Year 2025 Earnings Call. Today, we'll be discussing the results announced in our press release issued after market close.

Joining us from the company is CEO, John Dillon; and President and CFO, Steve DeMartino. Today's call will include a discussion of the company's key operating strategies, the progress on these initiatives and details on our fourth quarter and full year financial results. We will then open the call to participants for questions. As a reminder, this conference call contains statements about future events and expectations, which are forward-looking in nature.

Statements on this call may be deemed forward-looking, and actual results may differ materially. For a full list of risks inherent to the business and the company, please refer to the company's SEC filings, including its reports on Form 10-K and 10-Q. TransAct undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances that occur after the call. Today's call and webcast will include non-GAAP financial measures within the meaning of SEC Regulation G.

When required, reconciliation of all non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP can be found in today's press release as well as on the company website. And with that, I'll turn the call over to John.

Thanks, Ryan, and good afternoon, everyone, and thank you for joining us today. I'm pleased to report that TransAct closed 2025 with a strong fourth quarter, building on the momentum we established earlier in the year. This performance positions us well heading into '26 as we focus on driving revenue growth in the FST, that's foodservice technology vertical. And we expect software to serve as our primary growth engine going forward, supported by targeted and disciplined investments across the business, particularly in marketing and growth initiatives, and I'll share some of those details shortly.

In the fourth quarter, we sold 1,434 BOHA! Terminals, bringing the full year total to 7,317 which is a 36% increase year-over-year from '24 when we sold 5,371 units.

On day 1, my top priority was to improve our go-to-market and sales motions. There is always still work to be done. But given the success we've had placing new terminals, it's clear to me that we're moving in the right direction. The growth underscores the effectiveness of the land and expand strategy that we use as we continue to increase penetration within the customer base, and it's a large customer base, so that's good. Units sold continue to be the best leading indicator of our sales organization's performance. So I report that every quarter.

And it is encouraging to see strong retention across our installed base, which is one of the metrics I'm hoping to introduce probably in the next quarter or 2 as we discuss the different KPIs, key performance indicators that we report and we use to measure internally. I'm going to report those publicly. Before going into the quarterly highlights, let me update you on strategic priorities for '26. As many of you know from our discussions, we're evolving our focus towards revenue growth, of course, but particularly in FST, foodservice.

And we're funding that expansion through the steady cash flows from our casino and gaming vertical. We believe that software is unequivocally our growth engine going forward and that this is where we will drive not just revenue, but also margin expansion. In '25, we took an important step forward with our acquisition of the source code for the BOHA! software. And in '26, we intend to leverage our control of the code to enhance the offerings, introduce new applications and capture higher-margin recurring revenue. That's ARR, annual recurring revenue in that software.

We expect to deliver positive adjusted EBITDA for '26 while making targeted investments in sales and marketing to support the growth without compromising our fiscal discipline. This includes strengthening our sales team with a sharper focus on the software-led solutions and prioritizing the upselling of software modules into the existing customer installed base.

We are refining our go-to-market strategy with emphasis on competitive pricing, some strategic partnerships and targeted outreach in high potential subverticals such as the QSR, which is quick-serve restaurants, convenience stores, grab-and-go sushi, which has turned into a really strong market for us and corporate food services. Those are people that do, say, a stadium or a campus, a college university or a hospital organizations that under contract will provide the food services, and we are having good success in that market -- submarket as well.

These initiatives will require measured increases in spending, including selective hires in key roles, expanded digital marketing and continued investment in our product road map. We plan to maintain a disciplined cost management regimen to target positive adjusted EBITDA and preserve the strength of the balance sheet. You should hopefully going to do that, and we are. On that note, the transition following our acquisition of the BOHA! Source Code is progressing smoothly. We've made tangible strides standing up our own fully operational version, and we continue to expect the launch targeted for midyear 2026.

This ownership not only provides operational freedom, but also enables us to accelerate software innovation like exploring an application store model for our terminals, for example. This could allow users to opt into new applications directly on the hardware. It would drive additional software revenue streams as well. It's still a future project, but one we're excited about as we shift from a hardware-centric focus to a software-driven solutions provider environment. We're also working on migrating existing customers to a public cloud platform, which will enhance scalability and open up more cross-selling opportunities for us.

Longer term, we're aiming to get our installed base up to something like $200 per machine per month. That would be ARR or actually MRR monthly recurring revenue. It's a great thing if we can do it, and that's where we're targeting. This would unlock significant value given our growing installed base. I think right now, we've got some 18,000 to 19,000 online terminals in the marketplace, and we're adding more every day. So that's an important opportunity for us. And for context, data from comparable SaaS software service models shows that this level is very achievable, and we'll emphasize this through our sales team software-focused pitches, the GTM, the go-to-market enhancements and the sales training. So that's an area -- a key area of focus for us in '26.

Now turning over to the FST highlights for the fourth quarter. Total FST net sales came in at $4.8 million, up 12% year-over-year, fueled by hardware placements, expanding software adoption and record quarter for labels. Recurring FST revenue reached $3.4 million with the ARPU, that's the average revenue per unit at $756 per unit. Labels hit an all-time high at $2.6 million in the quarter. And while label sales can be lumpy, they are not only margin accretive, but they also help us build sticky, no pun intended, sticky long-term relationships with our customers. By providing best-in-class, cost-effective labels that help operators with compliance, branding and efficiency, we're fostering greater retention and hopefully opening doors for future software integration sales in the future.

The customer intimacy is really important, and this allows us to be a key part of the customers, if you will, business operation, and we enjoy that, and it's a good relationship. And we have a degree of confidence that none of the other vendors that might be in the marketplace do.

Our BOHA! Terminal 2 rollouts from prior quarters continue to progress as expected. And our installed base of roughly 40,000 legacy, these are off-line terminals, the AccuDate and the first-generation BOHA! units remain a prime opportunity for additional upgrades. We saw solid conversions and expansions throughout 2025, including further deployments with our large global QSR and also within the C-store customer base, where our Terminal 2 is boosting efficiency, reduces waste, improves margins for our clients.

In the fourth quarter, we had 3 new logo additions with about 600 potential future units, and we're confident in our new logo pipeline for 2026. As I mentioned last quarter, we're also excited about 2 potential new revenue levers in BOHA!. Near term, the labels business, as I mentioned, continues to perform well with potential for label-only deals where customers value our quality, expertise, pricing edge and our label design software. Longer term, the App Store concept I mentioned could transform our terminals into platforms for third-party applications, significantly boosting software revenue and, frankly, stickiness -- in accordance with our public disclosure obligations, we will keep you updated when appropriate as these initiatives develop, but our improving sales and GTM strategy is placing heavy emphasis on these software opportunities.

Before moving on, let me touch on our new Chief Marketing Officer, Dana Loof, who joined us recently to lead our marketing and growth initiatives. And while it's still early days for Dana, she has hit the ground running, and it's been an absolute pleasure working with her so far. Her priorities will include competitive positioning, messaging, a press release drumbeat and lead generation.

And of course, all of the content that we generate and that we create will find its way to refresh our somewhat lackluster website presence. It's been kind of a thorn on my side. I want that website to tell our story and tell it effectively, and we're going to get there pretty soon. As well, I expect to complement that with an active investor outreach program beginning in Q2 to tell the story, share the strategy -- share the strategy along with our plans for growth. We're looking forward to the impact she will have on our business, and we'll keep you all apprised of progress against these initiatives.

Shifting to casino and gaming. We recorded net sales of $5.3 million for the quarter, up 13% from last year and 2025 sales of $26.9 million, up 32% from 2024. While we did see some sequential softening in domestic demand towards the end of the year as anticipated due to macro headwinds in Las Vegas and broader casino performance, for some reason, the international sales continue to be strong.

Our new domestic OEM win, which we talked about in the last few quarters, gave us significant momentum in 2025, which has begun to taper off a bit as they work down their inventory while they wait for the next jurisdictional approval for new rollout. Although casino and gaming business is highly cyclical, I want to emphasize that there is always significant free cash flow generated from it, and we do not expect that to change in '26.

Different topic in gaming and casino, our relatively new Epic TR80 in the marketplace, the thermal roll printer is gaining traction in sports betting kiosks and video lottery terminals, and we anticipate it to become a more meaningful contributor this year. Overall, this vertical remains a reliable cash cow funding our FST investments while we explore expansion like charitable gaming and deeper Epicentral integrations for recurring revenue.

Moving on to financial guidance for '26. The company expects '26 net sales to be between $55 million and $57 million with an adjusted EBITDA, the company expects that to come in between $800,000 and $1.5 million positive. So I'm optimistic about the direction of the business in '26, particularly around our FST software initiatives and Dana's priorities for the year. We've delivered consistent BOHA! growth, recorded solid label performance in the fourth quarter and achieved both our revenue and adjusted EBITDA guidance for the year.

Our enhanced sales team and GTM that's go-to-market strategy will emphasize software upsell, partnerships and targeted subvertical expansion to drive this forward with measured incremental investments intended to keep us above that adjusted EBITDA breakeven line and to protect our balance sheet. We believe that our casino business provides stability regardless of where we are in the cycle of the market and controlling our software unlocks tremendous potential for the recurring revenue growth.

Our focus remains execution, fiscal discipline and creating shareholder value through prudent growth, and we look forward to updating you on progress in that regard. To sum it up, this was a turnaround. It's been a lot of work. There's been a lot we have to do. A lot has been done, and we believe we've now turned the corner.

The original opportunity is still in front of us, and we're ready to go get it and deliver on the promise. Lots of work ahead, but now it's all -- what I call it's all good work. So with that, let me pass the call over to Steve for a more detailed review of the numbers. Steve?

Thanks, John, and thank you, everyone, for joining us today. Let's turn to our fourth quarter and full year '25 results in a little more detail. Total net sales for the fourth quarter were $11.5 million, which was up 12% compared to $10.2 million in the prior year period. For the full year '25, total net sales were $51.5 million. That was up 19% compared to $43.4 million in '24 and within our increased outlook range for the year.

Sales from our foodservice technology market or FST, for the fourth quarter were $4.8 million. That was approximately flat sequentially, but up 12% compared to $4.3 million in the prior year period. For the full year, FST sales were $19.3 million. That was up 20% compared to $16.1 million in '24. We sold 1,434 terminals in the fourth quarter and ended the year with 7,317 terminals sold, which represented a 36% increase from the full year '24. Our recurring FST sales, which includes software and service subscriptions as well as consumable label sales for the fourth quarter were $3.4 million. That was up 24% compared to $2.7 million in the prior year period.

For the full year, recurring FST sales were $12.2 million, and that was up 14% compared to $10.8 million for the full year '24. Our ARPU for the fourth quarter of '25 was $756. That was down 14% compared to $875 in the fourth quarter of last year and down 5% sequentially from $792 in the third quarter of '25.

As a reminder, we continue to sell BOHA! Terminals to a large customer with no recurring revenue attached to them to start. While we expect to begin the process of changing the selling model to this customer in '26, for now, it represents a drag to our ARPU number. Our casino and gaming sales were $5.4 million, and that was up 13% from $4.8 million in the fourth quarter of '24, but down 25% sequentially.

As John highlighted, we began to see a demand slowdown in the fourth quarter as a large customer reached fully stocked status and is awaiting approval for rollouts to begin, which we currently expect will be sometime later in '26. For the full year, casino and gaming sales were $26.9 million, that was up 32% year-over-year. While we expect fluctuations quarter-to-quarter in our sales, overall, we expect casino and gaming sales to continue to contribute positively to our cash flow during '26. POS automation sales for the fourth quarter increased 47% from the prior year to $606,000. For the full year, POS automation sales were $2.2 million, and that was down 34% from $3.4 million in the full year '24.

Overall, Ithaca 9000 sales remain in our new normalized range, and we expect results to remain similar going forward in this market. Moving to TransAct Services Group, or TSG. TSG sales were $658,000 for the fourth quarter, and that was down 13% from $759,000 in the prior year period. Sales were down across all portions of the TSG market, including legacy consumable business, which consists mainly of sales of cases of thermal POS paper rolls and inked ribbons, which we've decided to exit.

We expect slightly declining TSG sales sequentially going forward. Moving down the income statement. Our fourth quarter gross margin was 47.6%, and that was down from 44.2% in the prior year period. Our full year gross margin was 48.6%. That was down just slightly from 49.5% in the full year '24. Going forward, we expect our gross margin to be in the high 40% range for 2026. Our total operating expenses for the fourth quarter increased by 19% to $6.6 million.

For the full year, operating expenses were $26.4 million, and that was up 5% compared to $25.1 million in the prior year, largely due to higher sales commissions, incentive compensation and share-based compensation resulting from our improved results in '25. These increases were somewhat offset by savings from cost reduction initiatives we initiated in late '24.

Breaking down our operating expenses a bit, our engineering and R&D expenses for the fourth quarter were flat sequentially at $1.7 million and up by 7% compared to the fourth quarter of '24. For the full year '25, these expenses decreased 4% to $6.7 million. Our selling and marketing expenses for the fourth quarter increased 3% sequentially and 6% over the prior year's fourth quarter to $2.2 million, largely due to severance charges.

For the full year, selling and marketing expenses increased 3% to $8.4 million. And lastly, our G&A expenses essentially stayed flat sequentially at $2.8 million for the fourth quarter, but increased 41% compared to the prior year's fourth quarter, mostly on higher incentive and share-based compensation. For the full year '25, our G&A expenses were $11.3 million, and that was up 14% from the full year '24.

For the fourth quarter, our operating loss was $1.2 million or 10.1% of net sales, and that compared to an operating loss of $1 million or 10.3% of net sales in the prior year period. For the full year, our operating loss was $1.4 million, and that compared to $3.6 million in '24. On the bottom line, we recorded a net loss of $1.1 million or $0.11 loss per diluted share for the fourth quarter compared to a net loss of $8 million or $0.79 loss per share in the year ago period.

For the full year '25, we had a net loss of $1.2 million or $0.12 per share, and that compared to a net loss of $9.9 million or $0.99 loss per share in '24. As a reminder, both our fourth quarter and full year '24 numbers included a $7.3 million noncash charge to income tax expense to record a full valuation allowance against our deferred tax assets. Our adjusted EBITDA for the quarter was negative $499,000 and that compared to negative $705,000 for the fourth quarter of '24.

And for the full year, our adjusted EBITDA was a positive $1.2 million, and that compared to negative $1.5 million in '24. Our full year adjusted EBITDA result placed us above the midpoint of our '25 outlook range. And lastly, turning to our balance sheet. It still remains solid. We finished the year with over $20 million in cash, which was up $6 million from our cash balance at the end of '24. And in terms of debt, we had only the minimum required $3 million of outstanding borrowings under our credit facility with [indiscernible]. And with that, I'd like to turn the call back over to the operator for questions. Operator?

[Operator Instructions]. Our first question is from Jeff Bernstein with Silverberg Bernstein Capital.

So maybe you can address the AI question. How do you see AI programming tools actually helping you guys with the business? How do you see them potentially increasing competition or reasons why they shouldn't do that?

Yes. Thanks for the question, Jeff. We use AI internally. You know that we have the code, the source code for the BOHA! software. And what the things you can do with some of the application tools is you can run the code through it and it can look for problems with the code, it can look for dead end, it can look for circular references.

And it can actually give you a summary of what the code actually does. So it's making us more efficient in that regard. And on a somewhat tangential issue, there are many applications that are in the food service industry and a couple in the gaming industry, where we will add AI tooling, nothing sophisticated, but just enough to help the clients make better decisions to optimize around the data they've got to decide on this strategy or that strategy or inventory management and the like.

So you'll see our products over time, engage with various AI technologies to improve our customers' interaction with the software and the results they get. Relative to competition, I think that -- I heard that story said. I think it's a lot of hype. It still takes a lot of smart people to create applications at the light users. And it's not lost on any of us that large language models allow you to write stories very quickly. Normally, what happens here is the AI systems can do a lot of the pedestrian work, kind of just basic coding, but you need somebody with user experience, user engagement model to be able to understand what's the flow. It's sort of like making a movie. You've got all the computers that can do the CGI stuff, but the reality is somebody has to build the storyboards to figure out what is it we're going to do? Why do we do it? Why do we do it this way? And there's an awful lot of that.

So it takes more senior expertise in the building, where what we're doing is we're -- we can gradually cut back on the lower-level programmers that do kind of the [ rotor, ] and we can have more brilliant people kind of focusing on delighting customers. So we see this as an opportunity, not really a threat. I know the marketplace has taken the downturn a little bit on the software companies.

But we're all engaging with the technology, and I don't think it's going to give some start-up companies some opportunity to roar in and magically build a brand-new system overnight that competes with a lot of the existing software. And the reality is that what we're doing is we're delivering enterprise-grade solutions. So it involves hardware, software, telematics, networking, whether it's WiFi, Bluetooth, LTE mobile and all of that stuff has to go together in a way where the customers that we serve are on the high end, and there's everything that is involved with that. It's not really commodity stuff, I guess, is what I'm saying. And we think that, that differentiation is something that's pretty sustainable.

[Operator Instructions]. There are no further questions at this time. I would like to hand the floor back over to John Dillon for any closing remarks.

Well, first, let me thank you for your time and attention today. We appreciate it. I'm looking forward to speaking with any of you. Some of you have scheduled calls. But as calendars aligned, if any of you want to follow up, feel free to reach out to me or Steve. So thanks again. And with that, we'll sign off, and we'll hopefully talk to you soon. Have a good day. Bye-bye.

This concludes today's conference. You may disconnect your lines at this time. We thank you again for your participation.

Greetings, and welcome to the TransAct Technologies Third Quarter 2025 Earnings Call. [Operator Instructions] And as a reminder, this conference is being recorded. It is now my pleasure to introduce Ryan Gardella of Investor Relations. Please go ahead.

Thank you. Good afternoon, and welcome to the TransAct Technologies Third Quarter 2025 Earnings Call. Today, we'll be discussing the results announced in our press release issued after market close. Present from the company is CEO, John Dillon and President and CFO, Steve DeMartino. Today's call will include a discussion of the company's key operating strategies, the progress on those initiatives and details on the third quarter financial results.

We'll then open the call to participants for questions. As a reminder, this conference call contains statements about future events and expectations, which are forward-looking in nature. Statements on this call may be deemed as forward-looking and actual results may differ materially. For a full list of risks inherent to the business and the company, please refer to the company's SEC filings, including its reports on Form 10-Q and 10-K. TransAct undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances that occur after the call.

Today's call and webcast will include non-GAAP financial measures within the meaning of SEC Regulation G. When required, a reconciliation of all non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP can be found in today's press release as well as on the company website. And with that, I'd like to turn the call over to John.

Thanks, Ryan, and good afternoon, everyone, and thank you for joining us today. I'm delighted to report that TransAct delivered another solid quarter in Q3 and continuing momentum we've built throughout 2025. For the quarter, we sold 1,591 BOHA! -- terminals urging the year-to-date total of 5,883 units, and that's up 58% from the 3,732 units sold through the first 9 months of 2024. I'm pleased with this increase and believe it shows clear progress against the initiatives.

As I mentioned in the past, units sold remain the best indicator of successful sales organization. And when I first joined as CEO, I laid out a clear land and expand strategy, and clearly, that expand motion is working well. The improving results for foodservice technology, we call it FST. That business highlights the effectiveness of the go-to-market improvements, and we believe this trajectory sets us up for ongoing progress and continuing improvement as we move into 2026. Our goal is to build the business with repeatable execution while leaning into the competitive advantages that make TranzAct unique and allow us to win in the market.

And before diving into the results, let me provide an update on our acquisition of the perpetual license to the BOHA! Source Code, which we announced back in August. As a reminder, we acquired this royalty-free license for $2.55 million, and it gives us full control to use, host market, sublicense, distribute, copy and modify the code. The implementation and standard process have gotten off to a good start and we're encouraged by this by what we will mean to transact in our BHA business, greater operational freedom, the ability to enhance the software without constraint and long-term value creation for shareholders and employees.

We expect the fully operational and supported version to launch in early 2027 and already see tangible progress towards that goal. Now let me dive into our FST highlights for the quarter. Total FST net sales rose to $4.8 million, up 13% year-over-year, driven by hardware sales and growing recurring revenue, including a partially strong quarter for Labels. Recurring FST revenue climbed to $3.3 million, generating a modest uptick in ARPU to $792 per unit from $700 in the prior year quarter. The main takeaway on the FST side of the business is that we're executing against our priorities and moving the needle meaningfully.

We see good momentum, and our GTM changes are yielding positive results. The rollout from prior quarters are progressing as planned and our existing base of approximately 40,000 AccuDate 9700 units plus first-generation BOHA! terminals remains a ripe opportunity for upgrades and expansion. We're focusing on that opportunity alongside new clients and customer growth. We continue driving conversions and expansions with key customers in the third quarter, including further upgrades across multiple Tier 1 accounts.

This includes additional rollouts with our major QSR customer and multiple C-store chains where the Terminal 2 is delivering real value to customers in the form of increased efficiency, reduced weight and ultimately higher margins for them. We added 2 new logos in the quarter, which while lower than we expected, was more than offset by expansion with our existing customer base. In line with this, we're excited about 2 recent customer wins that demonstrate the appeal of our BOHA! platform.

First, in September, we secured a rollout with one of the nation's largest sushi franchise operators which has over 2,100 locations. They placed initial orders for 596 units with either Terminal 2 LTE, which means they work with cellular phone lines, in other words, the wireless part. And these units are part of a broader initiative to modernize their network with plans to eventually equip all their locations.

The LTE version solves connectivity challenges for franchises in supermarkets or off network environments, eliminating the need for MiFi devices while enabling reliable cloud access and remote updates. This enhances food quality, operational consistency and efficiency, leading to better customer experiences and improve financial margins. As I said in the announcement, this deployment reinforces the real-world value of our BOHA! platform, reflecting its strong ROI, reliability and scalability. Additionally, in October, we added another convenience store chain with 81 locations, our growing BOHA! customer base.

They've deployed 73 BOHA! Terminal 2 devices for labeling workstations and adopted BOHA! Temp at 47 food service locations to digitize back-of-the-house operations. This integration streamlines workflows reduces manual processes and support passive compliance while driving higher margins and operational efficiency.

Before moving on, I wanted to mention that we're looking at 2 unique revenue opportunities in the boat space. One near-term focus and a second -- on a longer-term visionary path. The first looking at near term, our labels are not only an important contributor to recurring revenue, but a fundamental strength of the business. We have some prospective customers who may be interested in labels only as we are recognized as the best-in-class provider and importantly, cost-effective versus our competitors.

Second, from a longer-term visionary perspective, we're evaluating the development and launch of an app store for our BOHA! terminals to allow existing users to opt into new software purchases right over the hardware. This is a future project. It's on our map to consider now that we own the software. I wanted to point that out, but it is a future project, but I think it's a great idea, and I'm looking forward to making progress on it.

For developments that are currently hardware only, this could be a key driver of future software revenue, and we'll update you on these initiatives as we develop in coming quarters. Shifting to casino and gaming, we recorded net sales of $7.1 million in the quarter, which was up 58% from the year prior. However, as everyone has seen in the headlines, domestically, we are seeing some challenges in the demand side of the environment with Las Vegas and broader casino performance facing headwinds.

Our domestic OEM partners have indicated slowing demand and 1 large buyer from the first 9 months of 2025 is now in an overstock position while awaiting jurisdictional approvals on new machines. We currently believe this is a macroeconomic situation that we expect will flatten out in coming quarters. While we do expect this to impact our fourth quarter sales, we are hopeful that an improving set of dynamics will emerge as we enter and move through 2026.

I'd note that these factors are not being seen internationally, where we had a strong quarter, both sequentially and year-over-year. That said, we are also seeing traction with our EPIC TR80 thermal roll printer, which is used in sports betting kiosks, video lottery terminals and other applications. Sales for the first 9 months of 2025 have been modest but we anticipate it being -- becoming a larger contributor in 2026. Before handing the call over to Steve, let me update our financial outlook for 2025.

We based on third quarter and year-to-date performance, we're maintaining our full year revenue guidance of $50 million to $53 million, reflecting continued FST expansion and casino stability amid the anticipated fourth quarter deceleration. Adjusted EBITDA is expected to range from breakeven to positive $1.5 million for the full year, assuming no major disruptions in supplier demand.

I'd also like to call out that our balance sheet remains strong. We have $20 million in cash on the balance sheet at the end of '23, thanks to inventory sell down and disciplined management, this provides us ample working capital and flexibility to navigate any headwinds while positioning us for enhanced profitability and progress in 2026.

To close out, I'm pleased with our third quarter results and the process across the business. We drove significant BOHA! Terminal sales growth year-to-date, achieved higher FST sales with strong recurring contributions while maintaining positive adjusted EBITDA for the third straight quarter. The BOHA! platform is expanding successfully across our core subverticals, including convenience stores, health care, and sushi operators with 2 solid wins in the recent months, and we believe that our casino and gaming business remains solid despite some macro-driven economic softness that we're currently experiencing and expect to continue during the fourth quarter.

We continue our focus on execution, operational improvements and fiscal discipline to drive shareholder value. And with that, I'll turn the call over to Steve for a detailed review of the financials. Steve?

Thank you, John, and thanks, everyone, for joining us this afternoon. Let's turn to our third quarter results in more detail. Total net sales for the third quarter were $13.2 million, which was down 5% sequentially but up 21% compared to $10.9 million in the prior year period. Sales from our foodservice technology market or FST, for the third quarter were $4.8 million. That was up slightly by 2% sequentially and also up 12% compared to $4.3 million in the prior year period.

Our recurring FST revenue, which includes software and service subscriptions as well as consumable label sales for the third quarter were $3.3 million. That was up 10% sequentially and up 13% compared to $2.9 million in the prior year period. Our ARPU for the third quarter of '25 was $792, which was consistent sequentially with Q2, but up 13% year-over-year. Our ARPU for Q3 improved versus prior year as a result of strong growth in label sales. Our casino and gaming sales were $7.1 million, which was down 7% sequentially, but up 58% year-over-year, reflecting the market rebound John discussed.

Results were further driven by a new OEM win for use in non-casino charitable gaming applications, combined with normalized buying from just about all our major OEMs. As John mentioned, we expect our fourth quarter sino gaming sales to be sequentially lower due to dynamics in the domestic casino market. POS Automation sales for the third quarter declined sequentially by 32% and also declined 65% from the comparable prior year period to $399,000. As we discussed in the past, we believe that Ithaca 9000 printer sales have now reached a new normalized level based on competitive dynamics. As a result, we expect sales for POS automation to remain in about the $400,000 to $500,000 range per quarter for the foreseeable future.

Moving to TransAct Services Group, or TSG. For the third quarter, TSG sales were down 8% year-over-year to $792,000. This decrease was due to lower demand for legacy spare parts on a year-over-year basis, somewhat offset by higher shipping revenue. We expect TSG sales to remain at about this quarterly run rate going forward, consistent with normalized demand.

Moving down the income statement now. Our third quarter gross margin was 49.8%, which was up from 48.1% in the prior year period and up 160 basis points sequentially. Our margin performance reflects higher sales as well as a higher mix of casino and gaming sales compared to the prior year, somewhat tempered by modest cost headwinds from overhead inflation and tariffs. We expect gross margin to remain in the mid- to high 40% range for the remainder of '25.

I also wanted to give a brief update on our tariff situation. During the third quarter, we implemented a second small price increase to the original tariff surcharge we implemented earlier in '25 on applicable imported items. We did this to cover incrementally higher tariff and air freight charges we're incurring. To date, we haven't experienced any significant pushback from customers and don't believe this has had any negative impact on our sales performance for the quarter.

While we don't have any further price increases planned at this time, this is a fluid situation that we'll continue to closely monitor and update you all as needed. Our total operating expenses for the third quarter increased by 8% from the prior year third quarter to $6.5 million. Our engineering and R&D expenses for the third quarter were essentially flat at $1.65 million. Our selling and marketing expenses were up 11% to $2.1 million, and our G&A expenses were up 10% to $2.8 million. The increase in G&A was due largely to higher incentive and share-based compensation expense from our improved financial results.

For the third quarter, we had positive operating income of $14,000 or 0.1% of net sales compared to an operating loss of $837,000 PAUSE or negative 7.7% of net sales in the prior year period. On the bottom line, we recorded net income of $15,000 or 0 or breakeven EPS compared to a net loss of $551,000 or negative $0.06 per share in the year ago period. Our adjusted EBITDA for the quarter remained positive at $669,000, which was up from an adjusted EBITDA loss of $204,000 in the prior year period.

Lastly, turning to our balance sheet. As John mentioned, we crossed $20 million in cash and cash equivalents on our balance sheet at the end of the third quarter. This was mostly the result of success from a proactive inventory reduction program we put in place at the beginning of '25. Since the start of the year, through a combination of selling off remaining stock of older products, and more tightly controlling stock of other products, we have been able to reduce our inventory levels by over $4 million. However, we expect inventories to tick up some beginning in the fourth quarter and into as we restock new products in anticipation of growing future demand. In terms of our debt, we continue to maintain $3 million of required minimum borrowings under our $10 million credit facility at the end of the third quarter.

And before we close -- before I close, as we discussed last quarter, we believe the purchase of a copy of our source code will largely be a balance sheet event until we go live with our hosted version which we anticipate to occur in early '27. To that end, we expect to capitalize the $3.55 million of consideration to be paid plus any additional costs we incur related to in-housing the source code through the go-live date in early '27.

These costs will appear as an intangible asset on our balance sheet. At the go live point, we'll begin to amortize the total amount of those capitalized costs to cost of sales on our income statement over a 5- to 7-year period. As of the end of Q3, we have made the first 2 installment payments totaling $1.35 million and capitalize these costs which appear as an intangible asset on our balance sheet at the end of September.

From a cash perspective, we expect to fund the remaining $2.2 million of the $3.55 million purchase price plus any other related costs from the current $20 million of cash on our balance sheet. The remaining $2.2 million is expected to be paid in installments with approximately $200,000 to be paid in the fourth quarter of the remaining approximately $2 million to be paid during 2026. And with that, I'd like to turn the call over to the operator for questions. Operator?

The first question comes from the line of Jeff Martin with ROTH Capital Partners.

John, could you give us an update? You mentioned on the last quarter earnings call that in Casino gaming you're getting more aggressive and you're incentivizing winning competitive deals. Just curious how that initiative is going? And can you give us an update on the competitive landscape in that market.

Are you on mute?

I was on mute. Thanks for the question, Jeff. Let me just say that when you build a sales compensation plan for our sales team, you should assume that they're entirely coin operated. In other words, they're going to do exactly what makes them the most money. And so what we did is we gave the plan so that if you close a net new customer or if you take a customer away and a competitive win, we're going to get paid more. And without being more specific, let's just say it turned up the heat and it turned up the zeal to go after and win business.

All of that said, though, we're very mindful that we have a bit of a duopoly in the marketplace in the sense that we have 1 major competitor and we treat that competitor with respect, but we're not having a race to the bottom. They have their share of the market. We have ours. But when a new casino is going to come online, we're right there, and we like to think that our product is sufficiently better and that our services support and our field team is a better team and they can win head-to-head.

So we're focused on that, but the sales team knows for sure that if they're winning new deals, they're going to make more money than if they just sell more product to existing customers.

Great. And then, Steve, I don't know if you can give us a sense of the magnitude of the fourth quarter impact on casino gaming?

Not yet, Jeff. I mean, we're not going to publicly disclose that. But it's -- the demand is -- we're already seeing it, right? So we're into mid-November. So we have 1.5 months past. So we've already seen the weakness in the demand, and we expect it to continue for at least the remainder of the fourth quarter. I think it's temporary. But we don't know when -- I think when we get into '26, I think we should see ourselves start to come out of it. But for right now, it looks like the fourth quarter is going to be weaker than the third quarter.

Right, right. Okay. And then with respect to the non-charitable gaming markets, are you seeing much on the regulatory front that we can see more states open up as we head into 2026 here?

John, do you want to take that or you want me to take it?

Yes. No, it's very true. I mean it's an opportunity for state governments to make money without having to raise taxes. It's kind of an interesting thing. It's sort of like reinstate lotteries where some of the money goes to, say, education, some of the money goes to the state that they can pool and use for whatever they want. Some of it goes to the player and some of it goes to either the operator or the venue. And what's interesting about that market is that it's sort of a winner take all. If you are in that business, you would go to a state and you just pick a state and you say to the state government, I think I can do this for you.

And I will give -- you give me a contract for the entire state and I'll roll these machines out into places like BFW centers and other places where people like to play these games of chance. And it kind of feels good for the player because the player knows that they're somewhat funding a charitable event. It's very much like selling lottery tickets at the state level. And so when vendor that resells our machines wins, the state, a particular state, we will get 100% of the business. it's looking pretty interesting in a lot of states, as you know, that they tend to follow suit.

If 1 state does it and it works well, they tend to do the same thing. And I think this is an area that we think is going to be a very successful area for TransAct.

Great. And then my last question is on the new logo side in FST. I think you had 2 new logos last quarter to this quarter. You had commented that, that was PAUSE below your expectations? Maybe just could you help us frame how the pipeline is and how the new logo sales are developing from a pipeline perspective?

Sure. The sales cycles are long and kind of lumpy, especially since we're targeting the largest organizations that are in the food service industry. So it's a little bit like selling enterprise software. However, the 2 new accounts we landed have potential to deliver a considerable amount of volume over time, and that's part of the land and expand strategy. Pipeline remains basically the same. We have enough coverage to make the numbers that we forecast internally.

So I'm okay with that. But we are focused -- continuing to focus on the GTM to the market and lead generation and those other things that basically speed the top of the funnel and then we're paying a lot of attention to the metrics as that opportunities go through the funnel, what's a yield at each step and where -- what can we do in each 1 of those steps to improve it. So I'm comfortable with the performance. Obviously, more new accounts is better.

But the accounts that we landed in this quarter will be accounts that sustain us in the future. And I do focus on that pretty extensively, and we're not taking our eye off that ball.

[Operator Instructions] There are no further questions at this time. I'd like to turn the call back to John Dillon for closing remarks.

Thank you very much, all of you for your time and attention. We're happy to talk about the quarterly performance with any of you who feel inclined to schedule a meeting with us. You can get to us through Ryan Gardella who's our IR representative. And again, thank you, and good wishes.

This concludes today's conference. You may disconnect your lines at this time. And thank you for your participation.